The medical device industry has some blockbuster merger activity in recent months, but a few companies are sitting this one out.
Leadership at Boston Scientific (NYSE:BSX), C.R. Bard (NYSE:BCR) and Smith & Nephew (FTSE:SN, NYSE:SNN) all said in recently analyst calls that they aren’t looking to forge mega-mergers of their own, but are instead eying smaller tuck-in buys to complement their existing structures.
Two giant deals in particular have captured the market’s attention: Medtronic’s $43 billion merger with Covidien (NYSE:COV) and the pending $13.4 billion deal to unite Zimmer (NYSE:ZMH) and Biomet. Both have come with a spate of headlines, especially as Medtronic plans to move its corporate headquarters overseas to Covidien’s Ireland base.
"I would say the recent highly publicized acquisitions that you have read are certainly interesting news," Boston Scientific CEO Michael Mahoney said during a conference call last week. "But I would say in general it certainly does not impact our outlook in ‘14 nor do we see it impacting our strategic plan and our initiatives in any significant way."
"When we think about how we compete, we want to be the preferred innovative clinical leader in very large disease states. And we have 7 of those businesses today," Mahoney added. "We will continue to provide tuck-in acquisitions and the right innovation bets to be really clinically differentiated and have scale in those specific disease states."
Read more of MassDevice.com’s coverage of mergers and acquisitions.
In the last few months Boston Scientific has acquired Bayer AG’s interventional unit for $415 million and intrauterine surgical devices maker IoGyn for $65 million.
Bard has made a few agreements of its own, including the divestiture to Boston Scientific, and the company is looking for more deals – maybe even a big one.
“The fact that we haven’t done anything this year doesn’t mean that we don’t have an interest and we don’t have the capacity to do additional transactions,” Bard CFO and senior vice president Christopher Holland said during a company call. "We’ve got a lot of capacity to continue to fund the right strategic investments, and we’re certainly actively evaluating lots of opportunities."
"They need to make sense strategically and financially," Holland added. "When we do find ones that meet these filters that we have, we believe between the balance sheet and access to capital, we can certainly finance what we need to get done."
Smith & Nephew, which has been the subject of much speculation about a potential takeover, has said that it’s looking to avoid mega-deals in particular. CEO Olivier Bohuon told the Telegraph this week that it’s not looking for a "defensive" play like the Medtronic-Covidien deal.
These are exactly the deals we don’t want to do," Bohuon said. "It is not an offensive deal, it is defensive. You will see more in this type of business because people need to adjust their cost base.
"A good deal must always have a strategy component. If it’s just for money, I’m not sure this is great," he said.
Smith & Nephew recently threw down $1.7 billion to acquire ArthroCare (NSDQ:ARTC), a deal which closed in May.